Source: The Economist
Subject: The European Union’s delicate political economy
GREECE’S marathon crisis is at least instructive. Past flare-ups have illustrated a textbook’s worth of economic principles. The latest episode—a dispute over the sustainability of Greece’s mammoth debt—provides a lesson in political economy. The beleaguered economy itself is not at the centre of the disagreement; rather it is the European Commission and the IMF and others that are at loggerheads, squabbling over projections of Greek growth. This sort of institutional wrangling is not incidental to the process of European integration; it has historically been a crucial ingredient, helping defang the continent’s tricky interstate relations. But as Greece’s latest turn in the spotlight demonstrates, the role of Europe’s institutions has changed during the euro-area crisis. Paradoxically, they themselves have become part of the existential threat facing the European project. Den Rest des Beitrags lesen »
TONY BLAIR’S speech on Brexit on the morning of February 17th attracted a predictable storm of derision. Today the former prime minister serves as a sort of Rorschach test for whatever irks the viewer: to the left he stands for free-market capitalism and war, to the right he stands for a hyper-metropolitan internationalism, to some of his former acolytes he stands for how not to secure one’s political legacy after leaving politics.In parts of Westminster and Fleet Street voicing nuanced opinions about Mr Blair meets with a mix of bafflement and distaste, like ordering veal at a vegan restaurant.
To be sure, some of the criticism is valid. Mr Blair presided over the build-up to Britain’s financial and economic crisis and the failure of the post-invasion period in Iraq. His globe-trotting, pro-globalisation breeziness clashes with the prevailing mood among electorates in much of the West. His business activities since leaving Downing Street (ten years ago this June, believe it or not) have done his domestic reputation significant harm.
Yet the shame of all this is that it detracts from the many things Mr Blair says that are worth heeding. He may have been out of British politics for a while—that mid-Atlantic accent does not lie—but he remains the most successful British politician of the past two decades. To read some of his critics you would think his record, leading a previously unelectable party to three strong election victories, was achieved by pure fluke or by casting some sort of spell on an electorate that would never ordinarily vote for him. Whisper it softly, but perhaps the former prime minister is a better strategist, a more expansive thinker and operator, than these infantile interpretations allow. Den Rest des Beitrags lesen »
While native Germans are growing less eager to start businesses, new arrivals are ever more so
GERMANS are famous for hard work and efficiency, but not necessarily for entrepreneurialism.They are less likely to start a new business than Americans, Swedes or even the French (see chart). But the country’s recent wave of immigration appears to be giving its startup rate a boost. In 2015, 44% of newly registered businesses in Germany were founded by people with foreign passports, up from just 13% in 2003. In all, about one-fifth of those engaged in entrepreneurial activity were born abroad.
That is likely to grow with the arrival of over a million refugees in the past two years. The number of self-employed people with a Middle Eastern background rose by almost two-thirds between 2005 and 2014, according to René Leicht and Stefan Berwing, researchers at the University of Mannheim. “There has been a marked increase in founding activity by people from Syria, Iraq and Afghanistan,” says Maik Leonhardt of IHK Berlin, an association of small and medium enterprises.
Some refugees come to Germany already dreaming of running their own firm. Iyad Slik’s family has a confectionery company in Syria, and when he arrived in Berlin three years ago he set out to recreate it. “We broke even for the first time last year,” says Mr Slik. His mission to convert Germans to eating candied fruit and nougat squares stuffed with Syrian pistachios is succeeding: he already counts KaDeWe, a high-end department store, and the glitzy Hotel Adlon among his clients.
Others become entrepreneurs by default. Hussein Shaker, a computer programmer, did not plan to set up a business when he came to Germany: “I just wanted a job in tech.” Stuck in a call centre, Mr Shaker realised that he was not the only one among his Syrian friends working beneath their qualifications. Together with partners from Berlin’s startup scene, he set up a website for refugees, MigrantHire, which currently matches 13,000 job-seekers with about 2,000 open positions. Den Rest des Beitrags lesen »
As Donald Trump rages against the world he inherited as president, America’s allies are worried—and rightly so
WASHINGTON is in the grip of a revolution. The bleak cadence of last month’s inauguration was still in the air when Donald Trump lobbed the first Molotov cocktail of policies and executive orders against the capital’s brilliant-white porticos. He has not stopped. Quitting the Trans-Pacific Partnership, demanding a renegotiation of NAFTA and a wall with Mexico, overhauling immigration, warming to Brexit-bound Britain and Russia, cooling to the European Union, defending torture, attacking the press: onward he and his people charged, leaving the wreckage of received opinion smouldering in their wake.
To his critics, Mr Trump is reckless and chaotic.Nowhere more so than in last week’s temporary ban on entry for citizens from seven Middle Eastern countries—drafted in secret, enacted in haste and unlikely to fulfil its declared aim of sparing America from terrorism. Even his Republican allies lamented that a fine, popular policy was marred by its execution.
In politics chaos normally leads to failure. With Mr Trump, chaos seems to be part of the plan. Promises that sounded like hyperbole in the campaign now amount to a deadly serious revolt aimed at shaking up Washington and the world. Den Rest des Beitrags lesen »
What the visa ban shows about American foreign policy
A divided nation seeks a divided world
THE cavalier view some members of President Donald Trump’s inner circle take of the chaos they have unleashed since January 20th has startled both their opponents and many of their Republican colleagues. It should not. The insiders are doing things that Mr Trump promised to do on the campaign trail, and that they have long wanted to see done. And if they are doing it in a way that tramples other people’s sensibilities, then all the better; it is what their supporters would want.
Take the executive order of January 27th that barred citizens of seven mostly Muslim nations from entering America for 90 days, and halted all refugee arrivals for 120 days. So what if it was put together amid such secrecy that Mr Trump’s new secretaries for defence and homeland security were reportedly taken by surprise? Who cares if it was shoddily drafted in a way that saw travellers clutching visas and even green cards denoting legal permanent residency detained by customs officers until federal judges ordered their release?Billionaires from Silicon Valley complaining that their innovation is built on immigration? Protesters at airports and thronging the streets of foreign capitals? Bring it on. Even cases like that of Hameed Khalid Darweesh, an interpreter for the American government in Iraq, detained for nearly 19 hours at JFK airport in New York seemed to make no matter. Mr Darweesh cried as he told reporters he had been handcuffed, asking: “You know how many soldiers I touch by this hand?” Hardliners close to Mr Trump did not flinch when their president was forced to fire his acting attorney-general after she refused to comply with the travel ban. And they showed no sign of worrying that a policy nominally designed to reduce terrorism has little prospect of doing so. Den Rest des Beitrags lesen »
The biggest business idea of the past three decades is in deep trouble
IT WAS as though the world had a new appetite. A Kentucky Fried Chicken (KFC) outlet opened near Tiananmen Square in 1987. In 1990 a McDonald’s sprang up in Pushkin Square, flipping burgers for 30,000 Muscovites on its first day. Later that year Ronald McDonald rolled into Shenzhen, China, too. Between 1990 and 2005 the two companies’ combined foreign sales soared by 400%.
McDonald’s and KFC embodied an idea that would become incredibly powerful: global firms, run by global managers and owned by global shareholders, should sell global products to global customers. For a long time their planet-straddling model was as hot, crisp and moreish as their fries.
Today both companies have gone soggy. Their shares have lagged behind America’s stockmarket over the past half-decade.Yum, which owns KFC, saw its foreign profits peak in 2012; they have fallen by 20% since. Those of McDonald’s are down by 29% since 2013 (see article). Last year Yum threw in the towel in China and spun off its business there. On January 8th McDonald’s sold a majority stake in its Chinese operation to a state-owned firm. There are specific reasons for some of this; but there is also a broader trend. The world is losing its taste for global businesses. Den Rest des Beitrags lesen »
The new president has brought the habits of his campaign to the Oval Office
WHEN Richard Nixon’s presidency began his attorney-general gave this piece of advice to reporters: “Watch what we do, not what we say.” In his first week in office the 45th president said plenty to comfort loyalists and confound foes with his extravagant and disorientating lies. The press corps dwelt on what it means to have a White House spokesman who makes statements that are readily disproved, working under a president whose claims about voter fraud are entirely bogus. The startling thing is that in these first few days Donald Trump has been just as extravagant in his deeds as in his words.
Incoming presidents like to use their powers to take swift action even when they have majorities in Congress. The order banning foreign NGOs that “actively promote” abortions from receiving federal money is a good example. Even so, it is breathtaking how powerfully this president is signalling that he intends to honour campaign promises that some assumed were just talking points.So, too, is the passivity of congressmen who spent much of the past six years denouncing the previous president for his imperial use of executive orders. Den Rest des Beitrags lesen »
Source: The Economist
Subject: Free-trader turned game-changer
There are reasons to be worried about the head of Donald Trump’s new National Trade Council
Ready to rock
THE day after Ronald Reagan won his second term as president in 1984, a doctoral student at Harvard University published his second book. “The Policy Game: How Special Interests and Ideologues are Stealing America” complained that greedy interest groups and misguided ideologues had led America to “a point in its history where it cannot grow and prosper”. The solution: increase political participation and swap ideology for pragmatism.
On January 20th that student, now a professor, will enter the White House as part of a populist insurgency. Peter Navarro, a China-bashing eccentric who will lead the new National Trade Council, has emerged as the brains behind Donald Trump’s brawn on trade. Lauded as a “visionary” by Mr Trump, Mr Navarro may soon be the world’s most powerful economist working outside a central bank.
He once supported free trade. An entire chapter of “The Policy Game” extols its virtues, labelling the protectionism of Reagan, who coerced the Japanese into reducing their car exports in 1981, as “dangerous and virulent”. There was a hint of his later scepticism: he called for more compensation for workers who lose their jobs to foreign competition, and stricter trade rules at the supranational level. But one benefit of such rules, he wrote, would be to provide presidents with an “escape from domestic protectionist pressures…the issue would be out of their hands.” Den Rest des Beitrags lesen »
The EU’s newest members face economic decline unless they woo back workers, or recruit immigrants of their own
IN THE Lithuanian town of Panevezys, a shiny new factory built by Devold, a Norwegian clothing manufacturer, sits alone in the local free economic zone. The factory is unable to fill 40 of its jobs, an eighth of the total. That is not because workers in Panevezys are too picky, but because there are fewer and fewer of them. There are about half as many students in the municipality’s schools as there were a decade ago, says the mayor.
Such worries are increasingly common across central and eastern Europe, where birth rates are low and emigration rates high.The ex-communist countries that joined the European Union from 2004 on dreamed of quickly transforming themselves into Germany or Britain. Instead, many of their workers transported themselves to Germany or Britain. Latvia’s working-age population has fallen by a quarter since 2000; a third of those who graduated from university between 2002 and 2009 had emigrated by 2014. Polls of Bulgarian medical students show that 80-90% plan to emigrate after graduating. Den Rest des Beitrags lesen »
Source: The Economist: Schumpeter
How executives balance shareholder expectations and social pressures
AS THEY slid down the streets of Davos this week, many executives will have felt a question gnawing in their guts. Who matters most: shareholders or the people?Around the world a revolt seems under way. A growing cohort—perhaps a majority—of citizens want corporations to be cuddlier, invest more at home, pay higher taxes and wages and employ more people, and are voting for politicians who say they will make all that happen. Yet according to law and convention in most rich countries, firms are run in the interest of shareholders, who usually want companies to use every legal means to maximise their profits.
Naive executives fear that they cannot reconcile these two impulses. Should they fire staff, trim costs and expand abroad—and face the wrath of Donald Trump’s Twitter feed, the disgust of their children and the risk that they’ll be the first against the wall when the revolution comes? Or do they bend to popular opinion and allow profits to fall, inviting the danger that, in the run up to their 2018 annual general meeting, a fund manager from, say, Fidelity or Capital will topple them for underperformance? Den Rest des Beitrags lesen »